Putting rural folks on wheels

Philippe Lenain, CEO of Rent 2 Own Myanmar, is expecting to double his motorcycle rental business in Myanmar by the end of this year. Beyond that, his aim is to enable more rural people to own their own transportation and farm machinery, which will improve productivity and help raise families out of poverty.

Motorcycles are an essential for people living in rural areas. More than 70 percent of Myanmar people live in villages, and every household needs at least one motorcycle to make it easier and faster to go about their daily lives. But for low-income earners, it is not easy to buy one.

Having operated motorcycle rentals in Vietnam, Lenain recognised the potential for growth in Myanmar. “When we looked for business opportunities in Myanmar, we found that the use of motorcycles by rural population was similar to Vietnam, so I started this business,” he said.

Rent 2 Own introduced its motorcycle rental service in Myanmar in 2016. Since then, it has given free motorcycle helmets to more than 110,000 rural people, and helped more than 50,000 of its clients to buy their own motorcycles.

Ownership goals

Rent 2 Own was started with foreign investment of US$10 million (K15.16 billion). It has increased its investment in Myanmar to $35 million and plans to invest up to 40 million. It plans to double its number of rentals from 110,000 motorcycles to around 200,000 by the end of this year and extend its service to Chin State and Tanintharyi Region.

Most of its motorcycles are rented in Yangon Region, but it also offers rentals in Ayeyarwady Region, Bago Region, Shan State and Mon State.

Rent 2 Own rents motorcycles under the hire-purchase system. People who want to buy a motorcycle need to pay a deposit of 10 percent of the price and a once-a-month or once-a-quarter rental fee.

Payment contracts are for nine months to three years, with interest. During this term, the bikes must be serviced once every three months. At the end of the contract, renters have the option of returning their motorcycles for the initial 10pc deposit, or buying the vehicle. Around 99pc of renters choose to buy the motorcycles, said Kai Smith, head of operations at Rent 2 Own.

“The motorcycle is a part of the daily lives of rural people. We help those who have no income or jobs to own motorcycles,” Smith said.

Asset-light model

Rent 2 Own does not store motorbikes but jointly operates its rental service with sales centres in rural areas. Rent 2 Own has over 50 branches, with offices in Thanlyin, Bago, Pyay, Magwe, Monywa, Pathein, Malamyine, Meiktila and Taunggyi, and it has agreements with over 400 motorbike sales centres.

“Anyone can apply to buy the brand they want at their nearest sales centre if their centre has Rent 2 Own. We then settle the payment at the centre within 24 hours after the purchase. It’s convenient for both buyer and renter,” Smith said.

As Rent 2 Own was the first motorbike rental service in Myanmar, it had to overcome problems with commercial taxes at the revenue office, he said.

Most people in Myanmar don’t have proof of ownership of their bikes, of which 40pc are unlicensed. The main challenge is there is no government inspection mechanism for bike ownership, so yearly registration and licensing is needed.

Rent 2 Own cannot protect customers from bike losses, and insuring vehicles and riders remains a challenge, Smith said.

Nevertheless, the business has attracted the interest of investors, funding is more accessible, and it wants to expand its rental service to farm vehicles and machinery.

In April, Rent 2 Own raised $3 million in debt financing from Incofin CVSO, one of the funds under the management of Belgian impact asset manager Incofin.

Last year, Germany’s development finance institution DEG and agRIF, an impact focused fund for financial intermediaries targeting smallholder farmers and rural people, announced a joint investment of $6 million in Rent 2 Own.

Daiwa PI Partners, an investment arm of a major Japanese securities firm group, also took a stake in the venture by fully purchasing the shares of one shareholder.

As investments increase, its services will improve, he said. To reduce CO2 emissions by its rental motorcycles by 30pc, it will plant more than 45,000 trees in Shan State by the end of this year.

Source: Myanmar Times

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